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For a comment that is this cynical, I think it's largely correct. I've been struggling to communicate how a million retail clients are going to lose their life
by ve55 6y ago
For a comment that is this cynical, I think it's largely correct. I've been struggling to communicate how a million retail clients are going to lose their life savings (or more) in this (and what comes after it) and get burnt badly, ending with devastation and even suicides, but it appears to fall upon deaf or otherwise indifferent ears continually, so it seems like the cycle simple cannot be helped.
- armagon 6y agoI hesitate to ask -- do we really think people are stupid enough to gamble away lots of money they can't afford to lose? I'm hoping that instead there are hundreds of thousands of people who only bought a couple of stocks, understanding that they were likely to lose the money.
- ericbarrett 6y agoIf you assume that half the posts on WSB are true, and then assume the usual 100:1 poster:lurker ratio, that’s thousands of retail traders who’ve dumped student loans, college funds, retirement, life savings, etc. into the stock. Obviously this is not a precise or highly accurate estimate, but it is an estimate.
- hervature 6y agoI think you want to say 1:100 poster to lurker ratio right? For every poster, there are 100 lurkers?
- walshemj 6y agoYes you can see horror stories in the UK press of well of people (100's of k) putting all their life savings into a single boiler room stock scam.
- multjoy 6y agoYes. That’s why its called gambling. The gamification of trading masks the fact that you’re betting real money.
- variaga 6y ago> do we really think people are stupid enough to gamble away lots of money they can't afford to lose? Yes. Yes we do. Because "people" have done exactly that in every previous stock market bubble, and at every casino, and in sure-fire get-rich-quick "investment" schemes, and 3-card monte games... A better way to frame the question is "do we really think people as a whole have gotten fundamentally smarter since the last time this happened?" "There's a sucker born every minute."
- deleted 6y ago[deleted]
- hef19898 6y agoTwo examples from Germany: Telecom in the 90s and Wirecard last year.
- hogFeast 6y agoYes, being stupid enough to put your money into this stock is correlated with not understanding that you shouldn't put all your money in. This is why financial regulation exists. To protect people from themselves.
- RhysU 6y agoFinancial regulation should protect people from each other. No one can save you from yourself.
- hogFeast 6y agoWhether you should or should not, you can. That is why there is a designation that seperates professionals from retail, and why retail isn't allowed to invest in some things. All of this stuff has been happening for over a century. This isn't unknown.
- acdha 6y agoYes. Look at the history of the dot com bubble bursting in 2000 or the 2008 financial crisis and you’ll find tons of people who were massively exposed, often writing books or blogging about how they were making crazy amounts of money, and then the party stopped and their can’t-lose “investments” weren’t. Every decade or so you’ll find people who didn’t pay attention the previous time learning about the market the hard way.
- Jtsummers 6y agoA colleague at the time of the 2008 crisis was unable to retire. His stock portfolio (he was overinvested and did not balance his risk properly, especially considering his age) dropped from near a million to about $100k practically overnight. He owned his house (good), but the capital that would've carried him easily to the point where he could use his 401k and later receive social security was gone. He had to work several more years than planned. People don't consider risks very well.
- acdha 6y agoI was working at an Ivy and had coworkers (all professional staff, finance adjacent - theoretically above average preparedness) shift their investments into bonds, locking in losses at close to the bottom of the market. It hurt hearing people talk about that and knowing that it was too late to recover anything.
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- kevinmchugh 6y agoI've seen multiple posts, some here on HN, claiming that GME is mathematically guaranteed to surpass $1000. If people actually believe this, why wouldn't they put every spare dollar into it?
- bluGill 6y agoThey probably have, and now are posting trying to convince some other fool to buy and thus make it true so they can sell at $1000. This is called "pump and dump", and it is illegal.
- squeaky-clean 6y agoI was at the supermarket saturday and overheard 2 people talking (shouting really) about the price of Gamestop and how it was BS that Robinhood only let them buy 5 shares. It was pretty surprising to me that this had spread so much. But yeah I definitely believe it.
- pnathan 6y ago> I hesitate to ask -- do we really think people are stupid enough to gamble away lots of money they can't afford to lose? Oh. Yes. Yes, yes, yes. And it's not just the stupid people. Isaac Newton famously lost a fortune in speculation. That's the thing about manias. It takes over and so many people all over go broke by the end. They are famous for it: they are a predictable and repeating tragedy. Recognizing a mania is one of the first lessons someone who wants to do anything with stocks beyond INSERT 15% INTO VANGUARD 500 INDEX should do.
- axiosgunnar 6y agoSome, including Michael Burry (who‘s hedge fund profited almost 500% during the 2008 crisis) even go as far as calling index ETFs, like that one you mentioned, to be a bubble!
- pnathan 6y agoa proper index fund isn't a proper bubble, since it's proportional against an index, the net underlying asset that said, I grasp that there are some odd knock on effects with so many assets tied up in what are, approximately, a derivative.
- MattGaiser 6y agoThere were students when I was in university who spent their student loans on Bitcoin. They had to take a year off to do an internship to earn some money.
- random_kris 6y agoWell those students if they didn't sell are now seeing nice profits.. So there's that.
- redisman 6y agoBitcoin did always have a higher chance of going to the moon than a dusty old game retailer.
- gruez 6y ago> I hesitate to ask -- do we really think people are stupid enough to gamble away lots of money they can't afford to lose? yes. https://www.reddit.com/r/wallstreetbets/comments/la53nh/help_im_panicking_i_put_like_25k_in_gme_and_thats/ https://www.reddit.com/r/wallstreetbets/comments/la53nh/help... https://i.imgur.com/zy9I3IZ.jpg https://i.imgur.com/zy9I3IZ.jpg
- LatteLazy 6y agoNeed is a strong word, but... One of the jobs of financial markets is to correctly distribute capital. Moving money from people who do dumb things with it, to people who don't, is a good thing because more capital ultimately ends up in the right place. A good thing economically over all that is. The individuals losing the capital are likely butt hurt. But they should have stuck to indexes...
- ip26 6y agoIn general they probably aren't stupid enough to gamble money they can't afford to lose. Which is why step 1 is always convincing people it's such a sure thing that it's not gambling. Even if it is.
- redisman 6y agoThis does not match my model of people at all. I did have a gambling problem as a teen so I know those brain chemicals very well and they are not conductive to anything other than greed. If there's promises of easy returns / free money, you'll find tons of fools ready to jump in.
- klipt 6y agoThey've already bought into the narrative that WSB is "their side" and long the stock, while hedge funds are all "the enemy" and shorting the stock. Plus conspiracy theories about hedge funds (and not liquidity issues) forcing Robinhood to disable trading. So even if they lose everything they won't blame WSB, they'll just demand Congress make short buying illegal or something.
- deleted 6y ago[deleted]